'I would have been guilty.' After a lot of soul searching, Entrepreneur of the Year Marshall Rauch gets back to business.

• Author: Eldridge, Lisa
• Position: Feature

'I WOULD HAVE BEEN GUILTY'

After a lot of soul-searching, Entrepreneur of the Year Marshall Rauch gets back to business.

Marshall Rauch rose from his seat. The state Senate was debating a bill that could mean jail time for industrial polluters, and the quiet words he spoke were from the heart: "If this law had been in effect, I believe I would have been guilty. That's a scary feeling. I'm going to vote for this bill, but I'm going to do what I have to do."

His words took some by surprise. "Public soul-searching, it's a little hard for people to listen to," recalls Ruth Sheehan, who reported the July 19 debate for The Gaston Gazette.

Three months earlier, The Charlotte Observer had reported that Rauch Industries, the Christmas-ornaments manufacturer Rauch founded 38 years ago in Gastonia, had racked up 91 pollution violations over 12 years. Before the news broke, Rauch had built a $300,000 waste-water-treatment plant that is expected to bring the company into compliance. But the criticism stung.

That's why Rauch, senior member of the Senate and one of its most powerful players, stood before his colleagues to question whether he should remain in office. "The fishbowl that politicians live in will keep business people out," Rauch says, recalling his comments a week later. "This is the kind of thing that makes me say I'm going to have to do what I have to do, and what I might have to do is stay here."

"Here" is his bright-green-carpeted office on South York Road in Gastonia. Several hundred yards away, in the plant, machines are churning, popping out Christmas balls by the thousands.

Rauch Industries is the nation's oldest maker of satin Christmas ornaments and probably its largest. He stepped into an industry dominated by cheap imports and seized a share of the market by reinventing his product, year after year. His company posted record sales in 1987, '88 and '89.

Its success enabled him to launch a public career. But he's finding that the two roles -- businessman and politician -- don't always mesh. Like any entrepreneur who stays in business long enough, Marshall Rauch finally has had to face his own failings -- and try to surmount them. That's one reason BUSINESS NORTH CAROLINA has selected him as its Entrepreneur of the Year.

In August, Rauch caused a political crisis by deciding to withdraw from the Senate race to devote more time to his company. The state Board of Elections said he couldn't be replaced on the ballot, which, in effect, would give the seat he has held 23 years to a Republican. Rauch announced he had changed his mind and re-entered the race.

He is considering selling the company. Even if he doesn't, Rauch says, he will step down as CEO. Until then, he seems determined to set his company straight. He's pulled off feats more remarkable: as an American manufacturer who ripped off the Japanese and then produced his goods more cheaply, as a Jew making his living off Christmas, as a businessman who has learned to live in the public eye.

Charming and always well-dressed, Rauch, 67, seems a classic Southern gentleman, as a New York business acquaintance describes him. Actually, he was born in New York and raised in the well-to-do Long Island suburb of Woodmere. His father was a chemistry professor at Columbia University who later manufactured women's coats and suits.

A high-school basketball player, Rauch entered Duke in 1940, enticed by its new indoor stadium. He played guard and pursued a math major for three years, until his reserve unit was called. He joined the infantry...